The mission of Prognosis is to explore the nexus at which healthcare policy meets healthcare practice and how one affects the other. This blog makes readers more aware of the innovations taking place in healthcare delivery, financing and technology and the types of public policies that will encourage further progress.

Healthcare In Focus is a public education initiative of the HLC, created to promote a constructive dialogue about the state and future of American healthcare.

I guess it shouldn’t be surprising that a television news program would give a complex topic like the nation’s healthcare system a treatment that could be described as, well, glib. That occurred on CBS’s “60 Minutes” earlier this month when a correspondent suggested that healthcare institutions are raising prices “willy-nilly.” That description, besides being particularly nonilluminating, falls far short of explaining the evolving relationship between healthcare providers and the innovative companies creating medical technologies. The fact is, there is an intensifying effort on the part of both parties in this buyer-seller interaction to demonstrate how medical devices can lead to better patient outcomes, lower costs and, subsequently, greater value. I want to share an excellent interview on the topic that Edwards Lifesciences Chairman and CEO Michael Mussallem (a Healthcare Leadership Council member) in which he describes how his company and his hospital customers “make sure that the money they’re spending for our critical supplies helps their clinicians achieve their goals.”

Modern Healthcare: How has provider consolidation affected Edwards’ growth strategy?

Michael Mussallem: Because our products are so important clinically, our primary customer would have been physicians. More and more, there’s been involvement from economic buyers that want to make sure they understand the economic value of our products along with the clinical value. That’s probably the single biggest change. We don’t necessarily feel like we need to be large, but we feel we need to be really good. We need to be trusted. We need to show up with evidence. And we need to support providers in providing great healthcare for patients.

MH: How has Edwards changed the way it sells the value of its products to health system administrators?

Mussallem: We’ve gotten a clear message that administrators want to hear from clinicians that our products offer high clinical value. They want to see the evidence. So we have in a very organized fashion pulled together all the clinical evidence that talks about, for example, the nearly 30 years of data on the distinguished performance of Edwards’ heart valves. We also established a health economics group, which helps us assemble the economic evidence supporting Edwards’ products. That group also provides direct assistance to providers on how they can improve the value they offer to their patients.

MH: What are you doing to offset the pricing pressure associated with provider consolidation?

Mussallem: Hospital systems are aggregating their volumes and are becoming far more sophisticated in the way they purchase. We try and live up to that sophistication by being able to address all the questions that they have. Our experience is they really want to deliver great value to their patients, and they want to make sure that the money that they’re spending for our critical supplies helps their clinicians achieve their goal. We’re happy to be able to do that. It means we’re required to be more sophisticated and bring more evidence than we ever have in the past.

MH: Has that changed the way you’re designing clinical trials?

Mussallem : We’re most known for our innovations in transcatheter heart valves, which are valves that can be replaced without open heart surgery. In large randomized trials, not only are we collecting clinical data on the impact on mortality and the other complications, we’re also collecting quality-of-life data, health economic data. These data show how cost-effective this therapy is compared to past therapies or other alternatives.

MH: How receptive are hospital administrators to technologies you’re developing or selling that help reduce cost?

Mussallem: It depends. It certainly helps when we have clinicians who are passionate, who understand what kind of opportunities exist and have good, open dialogues with their administrators. We’re finding more receptivity among administrators than we’ve ever found in the past as they try and solve problems that weren’t easy to solve when you operate a hospital system more in silos. But now, when you look at it as an entire patient encounter—how much value do we deliver for what cost—it becomes a conversation that high-level administrators are having with us more often.

MH: How are you talking to administrators about technology like your ClearSight noninvasive technology, which can add cost per patient but may save money in the long run?

Mussallem: The theme of what we’re trying to help hospitals with is what we call enhanced surgical recovery. The idea is if you achieve proper fluid balance before a surgery, you can reduce complications and shorten length of stay, and there’s a tremendous amount of data that supports that.

Our new ClearSight technology allows a noninvasive way of collecting that sophisticated information. With an investment of about $300 upfront, you are able to save literally thousands on the back end and improve patient satisfaction in the process. This was something the British National Health Service implemented, and we’re trying to help adoption in the U.S. today.

MH: Are hospitals willing to spend more money on a technology like this?

Mussallem: I think hospitals are getting it. In the past, for example, there would just be an anesthesia budget, and they would just see the increased cost in that budget but not see the reduced cost from the shorter length of stay or the reduced complications. Now, there are administrators for whole service lines who are taking a broader look at hospital economics, so they are very interested in this kind of approach.

MH: Edwards announced in December that it invested in a company called CardioKinetix. Do you anticipate that the company will make other deals like this?

Mussallem: Our strategy continues to be very focused, with 95% of the products we sell in the No. 1 position around the world. So we don’t try and be very large and diversified. We try to be excellent at what we do, and we’re totally focused on structural heart disease and critical-care monitoring. The CardioKinetix investment is a great example of a new therapy that has some tremendous promise for heart failure patients that have few options. They’re in a randomized clinical trial, and we won’t know the results for a couple of years. But it’s a perfect example of the kind of thing that Edwards likes to invest in—early stage potential breakthrough technologies that change medical practice and produce much better answers for patients.

Mussallem: We’re pleased that there seems to be bipartisan support for re-examining the medical-device tax, and we think the odds of that making progress have improved. It is going to take a bipartisan effort. It’s probably going to take support from the White House. We’re cautiously optimistic that we will have some progress this year.

There has been plenty of discussion about the health coverage gap between the states that have expanded Medicaid eligibility and the 23 states that have, thus far, declined to do so. As a Kaiser Family Foundation study last December pointed out, about four million Americans living in states that have not altered their Medicaid thresholds have incomes that are above Medicaid eligibility but below the lower limit for tax credits to use for purchasing insurance in the health exchanges.

What has received less attention is the impact of the Medicaid debate on job creation. An article this week in the Dayton Daily News noted that about 7,000 new positions have been created in hospitals, physicians’ offices and other healthcare facilities in the first full year of Medicaid expansion in Ohio, an increase over the previous year’s job growth in the healthcare sector.

This is consistent with a Missouri study released last year which found that health sector job creation growth rates were significantly higher (2.1 percent versus 0.7 percent) in states that had expanded Medicaid eligibility versus those that haven’t.

The Healthcare Leadership Council has long maintained that expanding Medicaid is not the ideal tool, given its relatively low reimbursement rates and the number of physicians that are not accepting new Medicaid patients, for reducing the uninsured population. Making more individuals eligible for Medicaid, under the parameters of the Affordable Care Act, is preferable, though, to asking healthcare providers to bear larger uncompensated care burdens at a time when they are already absorbing ACA payment cuts.

We continue to urge the Obama Administration to be flexible toward the innovative steps a number of states are taking to expand coverage to more low-income citizens.